Senate sends solvency bills to governor

Plan to plug $69 million deficit includes cuts to school districts

SANTA FE — After days of wrangling, a $216million solvency package intended to fix New Mexico’s budget problems — at least for this year — and bolster the cash-strapped state’s depleted reserves is headed to Gov. Susana Martinez’s desk.

Both the House and Senate signed off Wednesday on compromise versions of two solvency bills after a legislative conference committee made up of delegates from both chambers struck a deal.

A third bill has already been sent to the governor’s desk.

In all, the bills would plug a $69 million projected deficit and give the state some budget cushion by reducing funding for school districts and taking money from various state government programs and accounts.

“They address the immediate crisis,” House Appropriations and Finance Committee Chairwoman Patricia Lundstrom, D-Gallup, told the Journal after Wednesday’s conference committee meeting. “I think it’s good bipartisan work.”

However, concerns simmered about several provisions in the bills, including a plan to take roughly $46 million from school districts statewide.

Rep. Dennis Roch, R-Logan, said other state programs, including public works dollars allocated annually and a state film incentive program that’s capped at $50 million per year, should have been targeted before schools.

“We’re going to ask schools to do the same job with less cash, and that puts some of them in a pretty desperate situation,” said Roch, who works as a school superintendent.

“What our constituents ask us to do is fund essential programs first,” he added.

The final version of the schools legislation would exempt districts that have cash reserves of less than 3 percent of their budgets and would require that the money —a roughly 2 percent reduction — for those affected come out of reserve funds, not core budgets.

Martinez, the state’s two-term Republican governor, had previously proposed taking an even larger amount — $120 million — out of school district reserves.

The plan would mean a $12.5 million loss for Albuquerque Public Schools, a loss of $1.9 million for Santa Fe, and a loss of $1.5 million for Rio Rancho.

The other solvency bill approved Wednesday would generate about $82 million in savings by “sweeping” unspent money from various state accounts.

Included in that amount would be $4 million from a state “closing fund” intended to offset the costs of business expansion and relocation. The original Senate bill had called for $11.6million to be taken, but the Martinez administration and House Republicans pushed back against the plan.

House GOP members also objected Wednesday to a provision, added in the conference committee process, to earmark $2 million in closing fund dollars for a Roswell airport hangar project.

However, the conference committee’s recommendation was approved on a party-line vote of 36-32, with Democrats voting in favor and Republicans opposed.

Martinez, the state’s two-term GOP governor, will now have three days to act on the legislation once it reaches her desk.

The two solvency bills approved Wednesday and sent to the governor’s desk are Senate Bill 113 and Senate Bill 114. The already approved bill is House Bill 4.

A fourth solvency bill, House Bill 5, is now on hold, and action on it might not be taken until sometime next month, Lundstrom said.

Martinez has vowed to veto any tax increase bills approved by the Legislature, despite poll findings that most New Mexicans would prefer a combination approach of tax hikes and spending reductions to just spending cuts to solve the state’s budget problems.

New Mexico’s budget crunch is caused largely by plummeting oil and natural gas prices, which have led to the state taking in less revenue than expected for two consecutive years. The state’s top bond rating was also downgraded in November.

Lawmakers enacted sweeping spending cuts and other one-time budget fixes last year, but more action was required after revenue estimates showed the state was still on track to have a budget deficit for the current fiscal year, which ends in June.

With the solvency package complete, lawmakers are now expected to shift their focus to crafting a budget for the coming year.

Although new revenue estimates will be unveiled next month, Senate Finance Committee Chairman John Arthur Smith, D-Deming, has said the state could be facing a shortfall of at least $300 million — and perhaps as large as $500 million — for next year.